The correct answer is: D. comparison of the firm’s past and current ratios with future ratios to ascertain the relative strengths and weakness in the past and future.
Proforma analysis is a type of financial analysis that uses projected financial statements to estimate a company’s future performance. It is often used to make investment decisions or to assess the financial health of a company.
To perform a proforma analysis, you will need to gather historical financial data for the company you are analyzing. You will then need to project the company’s future financial performance based on assumptions about the company’s sales, expenses, and other factors.
Once you have projected the company’s future financial performance, you can compare the projected results to the company’s historical results. This will help you to identify the company’s strengths and weaknesses, and to assess its future prospects.
Here is a brief explanation of each option:
- Option A: Making a list of all the present ratios of the firm. This is not a proforma analysis. A proforma analysis uses projected financial statements, not historical financial statements.
- Option B: Comparison of liquidity ratios with other kind of ratio of the firm. This is not a proforma analysis. A proforma analysis compares a company’s projected financial performance to its historical financial performance.
- Option C: Comparison of the ratio of the firm relating to the performance of the firm. This is not a proforma analysis. A proforma analysis compares a company’s projected financial performance to its historical financial performance.
- Option D: Comparison of the firm’s past and current ratios with future ratios to ascertain the relative strengths and weakness in the past and future. This is a proforma analysis. A proforma analysis compares a company’s projected financial performance to its historical financial performance.